More than 3 million HECS debt holders will have their balances slashed by 20 per cent from mid-next month, as the Albanese government follows through on a core election promise it introduced to parliament on the first day of the new term.
From mid-November the Australian Taxation Office will begin the process of applying the cuts to all HECS debts. It is expected that 50 per cent of student debt holders will get the reduction on their statements by the end of November. The remainder of debt holders should have their balances cut by mid-December.
Federal Education Minister Jason Clare has revealed the date of HECS debt cuts.
Credit: Alex Ellinghausen
“We promised we would cut your student debt by 20 per cent, and we are delivering. This is a big deal for 3 million Australians,” Education Minister Jason Clare said in a statement.
“This cut is already locked in to people’s balances at 1 June, but soon they will be able to see it and feel it. Just out of uni, just getting started, this is taking a weight off their back.”
For the average debt holder owing $27,600 the cut will represent a reduction of just over $5500. All cuts will be backdated based on June 1 balances, before the most recent round of indexation.
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Labor announced the policy to delete about $16 billion of debt over six months before the May 2025 election. It came alongside a move to lift income thresholds for repayments, meaning debt holders would begin paying off their HECS once they were earning $67,000, not the previous cap of $54,500.
Student loans do not affect the federal budget bottom line directly as the government makes a return on the debts. However, HECS debts are accounted into the government’s total net debt levels.
The reduction and change to indexation was the first piece of legislation the re-elected Albanese government tabled in parliament; however detail over when the cuts would come into effect was unknown.
